ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has announced draft regulations regarding the process and selection of independent directors of companies.
The Companies Act, 2017, defines the qualifying criteria as an independent director and requires that such directors be chosen from the databank maintained by an institute or body authorised by the SECP. Accordingly, in January 2018, the SECP had notified the Pakistan Institute of Corporate Governance (PICG) to maintain such a databank.
These regulations specify the manner and procedure of selection of independent directors from such databanks who fulfil key requirements.
The qualification criteria specified through the said regulations is aimed at encouraging new professionally qualified entrants along with experienced individuals. Furthermore, minimum details required for inclusion in such databanks is provided along with a modus operandi for access to such details by independent directors as well as companies. The due diligence for the selection of independent directors, as envisaged in the new law, continue to rest with the company.
The said draft regulations have been placed on the SECP’s website to obtain the public’s opinion. Stakeholders are encouraged to provide their comments through post or through email to [email protected]
The regulations are aimed at strengthening the profile of independent directors as envisaged in the Companies Act and reinforce the best governance practices in companies.